Safeway CEO Stephen Burd explains:

While comprehensive health-care reform needs to address a number of other key issues, we believe that personal responsibility and financial incentives are the path to a healthier America. By our calculation, if the nation had adopted our approach in 2005, the nation’s direct health-care bill would be $550 billion less than it is today. This is almost four times the $150 billion that most experts estimate to be the cost of covering today’s 47 million uninsured. The implication is that we can achieve health-care reform with universal coverage and declining per capita health-care costs.

What was the “Safeway”? First, they focused on encouraging healthy behavior:

Safeway’s plan capitalizes on two key insights gained in 2005. The first is that 70% of all health-care costs are the direct result of behavior. The second insight, which is well understood by the providers of health care, is that 74% of all costs are confined to four chronic conditions (cardiovascular disease, cancer, diabetes and obesity). Furthermore, 80% of cardiovascular disease and diabetes is preventable, 60% of cancers are preventable, and more than 90% of obesity is preventable.

Thus, they designed a voluntary “Healthy Measures” program, which requires employees to be tested for the aforementioned chronic conditions. If they “pass” all four tests–the information is not shared with management–they receive a rebate. If they don’t pass, they can make adjustments and retake the test (so to speak) in a year. According to Burd, “the numbers speak for themselves.”

Our obesity and smoking rates are roughly 70% of the national average and our health-care costs for four years have been held constant. When surveyed, 78% of our employees rated our plan good, very good or excellent. In addition, 76% asked for more financial incentives to reward healthy behaviors. We have heard from dozens of employees who lost weight, lowered their blood-pressure and cholesterol levels, and are enjoying better health because of this program. Many discovered for the first time that they have high blood pressure, and others have been told by their doctor that they have added years to their life.

Sounds like a win all around.